Theatrical 3D Failing to Live Up to Box Office Expectations, Analyst Says

3D is “not the panacea studios had hoped,” said BTIG analyst Richard Greenfield, who downgraded the 6,705-screen Regal Cinema shares to “sell” in a report on the BTIG website Monday. Regal shares closed 1.2 percent lower at $11.81 in Tuesday trading. In the 10 days ending Sunday, total movie industry box office was down more than $152 million, or 30 percent, year over year, “a staggering number,” Greenfield said, “for an industry that expected 3D technology to motivate people to get out of their houses and go to the movies.” Total attendance for Q4 is likely to end up down 12 percent, he said.

The U.S. consumer is growing less interested in 3D movies, Greenfield said. If accurate, the news doesn’t bode well for 3D’s already-slow roll into the living room. Panelists in various 3D conferences over the course of the year have touted the success of 3D at the movies, hoping to transfer early and mid-year receipts at the cinema to sales of 3D TVs and a willingness among consumers to pay for premium 3D content. “While the horror and gross-out comedy genres may benefit from 3D,” he said, citing 3D versions of Saw and Jackass, the vast majority of 3D movies this year “have been disappointing at best.” Exceptions, he said, were Alice in Wonderland, Toy Story 3 and Despicable Me.

3D upcharges and “annoying glasses that substantially dim the light of a movie, and which young children spend more time playing with than wearing,” are creating a recipe for disaster, Greenfield said. In addition, average premiums of $3.25 on top of average 2D ticket prices of $7-$7.25, combined with “sub-par content,” the incidence of 3D-induced headaches in some viewers, and the inability of other viewers to see 3D images at all, have soured Greenfield on the technology.

With content and storyline key factors to success -- and the belief that “technology alone is not a long-term path to success or profits -- Greenfield said the movie industry should reduce the number of 3D movies in the pipeline or “substantially scale back the upcharge as they are simply charging way too much for poor content.” He named the Jack Black comedy Gulliver’s Travels as an example of a movie that reaped no benefit from 3D technology. “We suspect even if the movie was bad, lowering pricing to 2D levels would have ended up selling more tickets.”